COSTS ON APPEAL – TWO ISSUES: COSTS AWARDED WHERE THERE WAS NO SCHEDULE BELOW: INDEMNITY COSTS WHEN A PARTY HAD MADE AN OFFER TO COMPROMISE AN APPEAL

An earlier post dealt with the substantive decision in Cross-v- Black Bull (Doncaster) Limited* (Sheffield County Court 21st December 2017). A short supplementary judgment dealt with two issues as to costs.

KEY POINTS

The fact that a party did not have a schedule of costs before the district judge at the hearing being appealed did not prevent the claimant recovering the costs of that hearing on appeal.

A party who offered to settle the appeal on terms of the appeal being agreed but with an order for “costs in the case below” had done better than its offer when the court ordered that the costs be paid in any event. The claimant was, therefore, entitled to indemnity costs from the relevant date after the offer was made.

THE CASE

The claimant had been successful in appealing against an order striking out the claim on the basis that an inadequate court fee had been paid. His Honour Judge Robinson then considered issues relating to costs.

THE ISSUES AS TO COSTS

(1)The absence of a Schedule before the District Judge

The claimant had been successful in the appeal against the order of the District Judge and sought his costs of the hearing that had been appealed. The defendant had – initially- been awarded the costs of the application so the absence of a schedule from the claimant was not of relevance.

The defendant objected to payment the costs on the basis that the claimant had not produced any schedule before the District Judge. The Schedule covering the hearing before the District Judge, had only been prepared only for the purpose of the appeal.

The judgment on this issue

The judge rejected the defendant’s arguments that the absence of a schedule before the district judge meant the claimant should not be entitled to the costs of that hearing.

“Having handed down Judgment in the appeal the – whereby the order of the Deputy District Judge was set aside, I am asked to deal with the costs issue before the Deputy District Judge. The application before the Judge was initiated by the defendant who sought to strike out the claimant’s claim as an abuse of process. For reasons given in my Appeal Judgment I determined the Judge was wrong and have set aside that order, therefore the claimant, on appeal, has been successful in defeating the defendant’s application. The claimant says he should have his costs of that application.

Miss Buck who did not appear before me in the appeal nor did she appear before the Deputy District Judge submits on instructions that because a costs statement had not been filed at the hearing before the Deputy District Judge in accordance with the CPR namely, without looking it up and from memory 24 hours before the hearing, then summary assessment could not have occurred and therefore the claimant should be deprived of all of his costs.

Now, I asked Miss Buck if there was anything by way of authority or principal or direction or anything that might assist me in determining the appropriateness of that costs direction. Namely the costs should be denied a successful claimant and as very fairly said no. Therefore, I am asked to exercise my discretion.

Ab initio I remind myself of the general rules about costs which appear in Part 44 of the CPR and I look at Rule 44.2. The court has a discretion where the costs are payable by one party to another. Well, I’ll start again, the rule is as follows; 44.2 (1) the court has discretion as to:

Whether costs are payable by one party to another;

The amount of those costs and;

When they are to be

It’s clear form that rule that decisions concerning the direction of flow of costs and the amount of costs are separate issues. It seems to me that the submission which Miss Buck was instructed to make conflates those two issues into one. It would be illogical on the face of it to determine that costs are payable by one party to another and then to determine that the amount of those costs should be nil. I read on, sub-rule 2: if the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but (b) the court may make a different order.

1 miss out three because it doesn’t apply. (4) in deciding what order, if any, to making out costs, the court will have regard to all of the circumstances including the conduct of the patties and it doesn’t seem to me that the other sub-paragraphs of that sub­ rule apply.

So, looking at the decision tree, it seems to me that on the face of it the defendant should pay the claimant’s costs in the court below. As to the amount of those costs, it was not possible for the District Judge to determine them. I am in the position of the Deputy District Judge, should I penalise the claimant to the extent of all of the costs? It seems to me that that would be an improper exercise in my discretion and a disproportionate response and, in those circumstances, I decline to doso.”

(2)Indemnity costs on the appeal following an offer of settlement from the claimant

The claimant had offered to settle the appeal on terms. Those were that the defendant agree to the appeal and that the District Judge’s order for the claimant to pay the defendant’s costs be replaced with an order for costs in the case.

The judgment on this issue

The judge found that the claimant’s proposed concession on costs was one that would have given the defendant an advantage. The defendant was ordered to pay the claimant’s costs on an indemnity basis 21 days after the day on which the offer was received.

“The second point I am asked to determine is the costs of the appeal.

There is no dispute concerning the direction of flow. The defendant will pay the defendant’s costs. The only issue is the effect, if any, of a Part 36 offer which was made on the 19 th of June, I don’t know when it was served but the effective date for acceptance would have been some time in July. The offer was not accepted and therefore Mr Exall says that the Part 36 consequences limited to costs on the indemnity basis after the relevant date in July should apply.

The offer was made in Form N242A insofar as material, this was the offer. It was an offer to settle the whole of the appeal and the details of the offer given are thus;

“To agree the claimant’s appeal against those parts of the order made on 14 October 2016 striking out the claim and ordering the claimant to pay the defendant’s costs on the basis that the part of the order striking out the claim be set aside and the order as to costs be substituted by an order costs be in the case.“

Looking at the order which I have made on appeal Mr Exall argues that the claimant appellant has done better because I have ordered the defendant to pay the claimant’s costs in the court below whereas the concession offered by the Part 36 offer was to agree costs in the case. The advantage to the defendant argues Mr Exall is that whereas it is now certain that the defendant will have to pay the claimant’s costs, the offer made by the claimant gave some hope to the defendant that it would not have to pay the claimant’s costs if the claimant failed in the claim.

The other way of looking at it is; is it possible to say that what was offered is an advantage until the claim is finally determined because if the claimant does win, then the order I have made today is exactly the – or the consequence of the order I have made today mirror exactly the consequences that will be made at the end of the trial and so the issue is whether offering some hope to the defendant that it might avoid having to pay the claimant’s costs represents a concession.

The issue is important because the concept of concession was considered by the Technology & Construction Court, by Mr Justice Edward-Stuart in the decision of Jockey Club Racecourse Limited and Willmott Dixon Construction Limited Neutral Citation [2016] EWAC 167 TCC. In fact, the – the offer made was to split liability 95/5 so that if successful the claimant would recover 95 per cent of the value of the claim and it is clear now that such an offer is valid but it’s erm the principles discussed which are important.

The Judge was referred to Huck & Robson and – [2003] I WLR 1340 and also to AB -v- CD [2011] EWHC 602 Chancery. The Judge read out paragraphs 21 and 22 of the Judgment of Mr Justice Henderson AB -v- CD case thus:

“21. The claimant ‘ s Part 36 offer, or purported Part 36 offer, is contained in the letter of 5 July 2010 subject to one point, I consider that it complies with the requirements of form and content in Rule 36.2. However, there is an issue whether it is a genuine offer at all or merely a likely disguised request for total capitulation. If it is a proper Part 36 offer the question arises whether the Judgment which the claimant has now obtained against the defendants is : ” at least advantages” to the claimant as the proposals contained in the letter within the meaning of Rule 36.14 (1) (b)

The concept of an “offer to settle” is nowhere defined in Part 36. I think it clear however that a request to a defendant to submit to Judgment for the entirety of the relief sought by the claimant cannot be an “offer to settle” within the meaning of Pait 36. If it were otherwise any claimant could obtain the favourable consequences of a successful Part 36 offer including an order for indemnity costs by the simple expedient of making an “offer” which required total capitulation by the defendant. In my judgement the offer must contain some genuine element of concession on the part of the claimant to which a significant value can be attached in the context of the litigation. Pause there, I emphasise the word significant. The basic policy of Part 36 is to encourage the sensible settlement of claims before trial or even before the issue of proceedings … the concept of a settlement must, by its very nature, involve an element of give and take. The so-called “settlement” which was all take, and no give would in my view be a contradiction in terms”

And then returning to the body of the Judgment in Jockey Club paragraph 28: “With respect , I wholly endorse and adopt this succinct and elegant explanation of what is meant by an offer. Although the claimant’s offer in this

case was hardly generous, in my view it cannot be described as “all given no take””

So, the issue is whether the removal of the risk of non-payment constitutes a concession to which a significant value can be attached. If one puts oneself in the position of the parties before the Deputy District Judge, had the claimant succeeded so that the defendant ‘ s application failed, a consequence where the defendant obtained an order for claimant’s costs in case would be considered by the defendant to be at least a partial retrieval of the situation which would otherwise have been a total lost. Application dismissed, defendant pay claimant’s costs is a total loss. Application dismissed, claimant’s costs in case meaning that the defendant would only be liable for the claimant’s costs if the claimant won. That would be seen as a victory in part.

To that extent, not without some hesitation, I am driven to the conclusion that the offer made in the Part 36 offer does contain some genuine element of concession on the part of the claimant to which a significant value can be attached in the context of the litigation. In those circumstances I accept the submissions of Mr Exall.”